Sample Question - ERISA

What is the penalty under ERISA if a company does not issue summary annual reports on the pension plan to its retirees? Is compliance of this ERISA requirement enforced?

Plan administrators of a plan that is not exempt from filing a Form 5500 must provide a summary annual report (SAR) to the participants within nine months after the end of the plan year. It is important to first determine if the plan is required to provide the reports. For example, a totally unfunded plan, (benefits paid by employer - no employee contributions)is exempt from the SAR requirement even if the plan administrator must file a Form 5500 because there are at least 100 participants.

The requirements for a SAR are set forth in the DOL's regulations and can be found beginning at 29 CFR 2520.101-1.  There are penalties surrounding the willful violation of the requirement to provide SPDs, SARs and certain other information requested by participants.  Such activity can result in a fine of up to $5,000, imprisonment for up to 1 year, or both if the person convicted is an individual. If the person convicted is not an individual (e.g., it is a corporation), the fine can be as high as $100,000.

Disclaimer: The recommendations and opinions provided by e-HResources.com, LLC are based on general human resource management fundamentals, practices and principles, and are not legal opinions or guaranteed outcomes. We strongly recommend, as part of a team approach to management, that clients consult with legal counsel of their choice to address legal concerns related to human resource issues